Tax rises of £30bn needed to meet defence targets

Rachel Reeves could be forced to raise up to 30bn through tax rises or funding cuts as the chancellor seeks to meet Labour’s pledge to boost defence spending, an economist has claimed.

- ANDY GREGORY

The government has promised to increase defence spending to 2.5 per cent of GDP by 2027, and has an “ambition” – but no firm commitment – to raise it to 3 per cent in the next parliament, after 2029.

But the UK’s Nato allies are expected also to push for a fresh target of 3.5 per cent, with the alliance’s chief Mark Rutte pushing for a “dramatic increase”, with discussions over a possible 5 per cent target – as called for by Donald Trump – also taking place.

And Sir Keir Starmer this week vowed to make Britain “a battleready, armour-clad nation” as a long-awaited defence review called for major upgrades to the UK’s military.

While the major proposals were based around Labour’s current spending pledges for 2027 and the next parliament, the report warned that “as we live in such turbulent times it may be necessary to go faster” on increasing the UK’s defence capabilities.